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#1
08-31-2004, 12:07 PM
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Taboo Question?
Taxes? How do you view most small stakes players deal with them? I have a fealing at least a lot (if not most) don't pay. How do you deal with them? For me, the tax man is the biggest killer of my bankroll. I have to do much better than breakeven to actually breakeven after factoring in taxes. The tax laws are pretty unfavorible (US anyway). I set aside 30% from my winning sessions, so that I will be able to pay fed and state taxes at end of year relating to my gambling income. My reasoning is that I am in about the 25% fed tax bracket and roughly 5% for state. I get little to no benefit of my losing sessions, as I usually take the standard deduction as apposed to itemizing deductions or claiming as if I were a pro on sched C. IMO removing 30% of all winning session from active bankroll would kill a breakeven player or slightly winning player. After the rake and the taxman gets done with me, I am surprised that I can still grow my role. How do you all (if you do) deal with this? Any thoughts?
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#2
08-31-2004, 12:10 PM
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Re: Taboo Question?
I live in Canada so have nothing constructive to add but I do have a question.
[ QUOTE ] I have to do much better than breakeven to actually breakeven after factoring in taxes. [/ QUOTE ] How is this possible? Don't you just get taxed on overall winnings? So if you make 10k and get taxed at 30% you still walk away with 7k. If you make 1k and get taxed at 30% you still make 700. I must be missing something because the quoted statement doesn't compute with me.
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#3
08-31-2004, 12:34 PM
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Re: Taboo Question?
i don't really want to get into the mecanics and bore a lot of people. And I don't want people relying on my interpretation of US tax Law. but anyway read at your own risk.
Basically, If you are professional gambler your statement is close to being how it would work. Your losing sessions would offsett your winning sessions, but you could not reduce wins below 0. You would then be taxed at your net win for the year. If you are not a pro, and you itemize deductions you basically have similar position to pro but your losses are not dollar for dollar b/c they are subject to schedule A limitations. It is worse if you do not itemize and are a taxpayer that uses the standard deduction. If you take the standard deduction b/c you do not have enough itemized deducitions to file schedule A, you are in my bad situation. You do not get any benefit of your losing sessions. Thus I am taxed on 30% of winning sessions and my losing sessions do not help me in anyway. This is likely just an individual tax issue that I have and should not burden you all with it. I was just wondering if anyone else faces an obstacle like this. I could solve it by doing things to be a sch A filer, such as becoming a homeowner. Or I could become a pro... but we know I am not there yet.
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#4
08-31-2004, 12:39 PM
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Re: Taboo Question?
-We have to input wins and losses separately. If you have $1000 in winning sessions and $500 in losing sessions, you have to declare $1000 in income. You then may be able to deduct the $500 in losses.
-We have a thing called a standard deduction. Everyone gets to deduct this amount from their income. -If you have kids, you get to deduct more for them -You have a choice of itemizing (declaring everything you may have such as medical bill, gambling losses, etc) your deductions, or just taking the standard deduction -For many, their individual deductions, including gambling losses, comes up to less than the standard deduction, which means you end up declaring the full amount of wins ($1000), and eating the losses ($500). - What you cannot do is declare the net, $500, as your poker income. You have to declare the full $1000. Is that clear as mud?
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#9
08-31-2004, 12:50 PM
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Re: Taboo Question?
These might be dumb questions, because I don't play at very high limits, but what forces you to report the income? How is it tracked?
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#10
08-31-2004, 12:54 PM
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Re: Taboo Question?
My accountant, who is also a poker player as well as being a tax accountant, says that for internet poker you can define a session by your buy-ins and cash-outs. So your buy-ins for the year are what you deduct from your cash-outs. Not your table by table results for the year.
If you are going to pay taxes on your poker winnings, you probably want to use an accountant, and have them get interpretations of all the rules concerning these things, because it isn't at all clear, at least to me.
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